Author: Matthew G. Saroff

No, This Is Not The Onion

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You just have to love this.

The Badr Brigades are militia of the Islamic Supreme Council of Iraq (ISCI, the artist formerly known as SCIRI).

In addition ISCI and Maliki are doing their level best to ensure that they occupy as many positions in the security services, police and military, as possible.

During the Iran-Iraq war, the Badr Brigades fought for the Iranians. They were a part of Iran’s Revolutionary Guard, which the State Department has declared a terrorist organization.

As a result, these folks are literally collecting a pension from the Iranian Revolutionary Guard.

So, the dog that we choose to hunt with in Iraq is literally pulling a pension from the Ayatollahs.

Economics Update

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Well, it looks like 80,000 jobs were lost in March, and the unemployment rate went up to 5.1%, see here, here, and here.

There was good news, at least by the standards of the hacktacular financual press, the ISM’s report on non-manufacturing businesses rose, from 49.3 to 49.6, when it was expected to be 48.5.

Note that while the headline on the story speaks of a rebound, it’s not. Any number under 50 is a contraction, so the contraction was slower than expected, but it was still a contraction.

Given these numbers it’s no surprise that the Federal Reserve is signaling more rate cuts.

It won’t work. We need to go Nordic on this problem and nationalize the insolvent institutions, for a time at least.

Give all this information, it should come as no surprise that we are getting reports of skyrocketing vacancies in commercial space, the stuff that all the “experts” said was not going to be a problem.

This is typical. Commercial space lags residential space.

It won’t help that Oil is back above $105/bbl.

It also looks like Delphi auto parts may be going under, Appaloosa Management LP is pulling out of a deal to invest 2.55 billion in the manufacturer.

This will leave GM on the hook for a lot, and they may have no parts for their cars.

O’Malley Pushing Law Change for Special Election

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Now that Wynn has given his resignation, there is a consensus developing in Annapolis that it would be a good thing for Donna Edwards to get in on an early election, if just to give her a seniority jump on the other freshman congressmen.

O’Malley is proposing a change in the election law to allow for a special election based on the current primary results, which would cut the cost of special elections in half, more so if you hold it at the same time as the general election.

Generally it sounds good to me, though I’m inclined to go with the special election and swearing in at the same time as the general, as it is even cheaper.

Press Beginning to Notice that Inflation Numbers are Complete Bollocks.

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Elizabeth Spiers at Fortune magazine notes that increasingly, it seems that consumer price index numbers have no bearing in reality.

It’s true.

Here is a graph from John Williams’ Shadow Government Statistics

If he is only half right, it means that total price change over the past two decades is understated by something near 50%.

When one tries to get a grip on the cost of living, there will always be a subjective element. When, for example, did the cost of ice delivery get dropped from the CPI. The ice man was a big deal in 1922, after all.

That being said, there has been a consistent assault on accurate CPI numbers from pretty much everyone in government for the past 30+ years.

It makes things easier. Artificially ow CPI numbers mask declining living standards and make inflation adjusted benefits cheaper, allowing for lower taxes.

The question is then how is this done.

The first way is through what is called “hedonics”. Basically, it adjusts the prices of commodities because their quality has improved. Check out The Illusions of Hedonics from the Mises Institute for a good critique.

Let’s apply hedonics to a car, for example. It’s clear that a new car today is far safer and more fuel efficient (per weight of car) than a car of a few years ago, so why should we not make an adjustment for that?

The first answer is that we can measure this more accurately in other ways. Safer cars mean less health care spending*, and better fuel economy means less spending on gas. Thus, the market basket would change.

The car delivers the same service as it did 20 years ago, just as my computer, despite being millions of times more powerful than it was 20 years ago delivers the same service, word processing, spread sheets, etc.

The second way of fudging the numbers is by messing with what goes into the “basket” which is used to figure CPI.

Why, for example, is a 3 fold increase in the price of housing in the past decade or so not inflationary, but instead “asset appreciation”. Housing is a necessity. It should be an integral part of any look at inflation, but instead, the rising house prices are waved away with some fairy dust, and all is well.

Look at the picture above, and if Mr. Williams is right, and I believe that if anything he is conservative on this, it means that there is about a 2½% spread between official and real inflation.

That means that true cost of living doubles an extra time roughly every 20 years. Which means that right now, the cost of living is nearly twice what the government is reporting, because it ignores skyrocketing healthcare, education, and housing costs, along with using bogus tweaks to create a bogus number.

No wonder the people of the United States are in debt up to their eyeballs.

*I would note however, from a purely economic perspective, replacing airbags with double ought buckshot shells would net an even higher reduction in health care costs, since dead people need no health care.†
†And this argument is why people who see classical economics as the tool for all societal problems are full of it. Economics is a tool, not the tool for dealing with the world.

Tanker Update

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In congressional testimony before the House Armed Services, Sue Payton, Air Force under secretary for acquisition, was asked if asked if additional credit was given in the process for exceeding the contract minimums. Her response was that the minimums were just that, minimums.

If you did not meet the minimums, your bid would not be accepted, but that, “It was also very clear that extra credit would be given to the offeror who exceeded that threshold”.

Much of the crux of Boeing’s complaint is that this is irregular. It is not. I have read hundreds of requirements for military programs, and the overwhelmingly majority of them have a “threshold” (minimum), and an “objective” (good to have).

This has been a part of the procurement process for years, and to the degree that Boeing is using it for a challenge, this is completely bogus.

F22 Showing Itself to be a Maintenance Pig

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As Bill Sweetman Notes, the F-22 is not even close to achieving its desired maintenance goals:

  • The mean time between maintenance intervals is less than one hour.
  • That number is half what it should have been at the end of system development and demonstration, in December 2005.
  • It’s one-third of the “mature” goal, which is supposed to be achieved in 100,000 operational flying hours, in 2010.
  • It hasn’t improved in the past year.

This is not academic. Last year, there was a class-A mishap when an F-22 sucked in a piece of RAM and trashed an engine.

The wild blue yonder boys seem determined to innovate themselves out of any meaningful military capability.

More Taser Abuse

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Some guy falls down the stairs, gets a head injury, tries to drive home, zones out in the parking lot in his car, and when a disoriented man does not respond to police orders, he is tased repeatedly, then wrestled to the ground, handcuffed, and dies (see here and here).

It’s clear that Tasers should be legally as a lethal weapon, because the police use them irresponsibly and with impunity because, unlike other potentially lethal force, there is no review board following the use, unless there is a death.

Randi Rhodes Suspended For Calling Hillary Clinton a “Whore”

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More specifically, she called Clinton a, “Big F*cking Whore, and applied similar language to Ferraro.

Air America’s official statement is here.

She was doing a stand up gig at the SF Air America affiliate at the club, and yes, this is over the top, and not the F-bomb.

Also, I don’t get Air America, no station that I know of carries it in the Ballmur area, so I haven’t heard her before….Does she always sound this….drunk?

Economics Update

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First, we have a new peak in Jobless claims, 407,000, the highest level since Katrina hit New Orleans (here and here). Note, as always, that weekly jobless numbers are just a snap shot of a single week, and as such, there is a lot of noise, but this did not stop the dollar from retreating in response.

That being said, the fact that the IMF is predicting a global slowdown ain’t a good sign either.

Given that we have a consumer driven economy, the fact that people are falling behind on their debts at the highest rate in 15 years is a good indicator that we are already in a recession.

In energy, was down a buck, and gasoline hit a new record. Assuming that we are not at peak oil, there might be some moderation as the economy cools.

The markets are seeing a cooling economy too, driving Treasuries higher, because investors are looking for safe havens.

In real estate house prices fell in 21 metro areas, and foreclosures rose to record levels. Same old same old.

Finally, I’m beginning to feel like Keith Olbermann and Bill O’Reilly. I can’t make through a week without some insurer disaster intruding. In this case, it’s Triad Guaranty Inc., which is considering, “a plan to stop writing new business”, called a “run-off” in the insurance. Note that it’s business is mortgage insurance, as opposed to monoliner bond insurance.

Too many people defaulting on mortgages.

Bush Gets Missiles at NATO Conference

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Well, it appears that Bush has managed to browbeat the Europeans into accepting an ABM installation spread across Poland and the Czech Republic, despite the fact that he pissed them off of by publicly lobbying for the admission of Georgia and the Ukraine to NATO, despite the fact that there had been a previous agreement not to do so.

The marvelously named Duck of Minerva makes the point that Bush was talking out of both sides of his mouth, on the one hand claiming that the missile shield is not intended to be used against Russia, and on the other claiming that the membership of Georgia and the Ukraine, “would send a signal throughout the region that these two nations are, and will remain, sovereign and independent states.”

If they need membership to be protected against Russia, then who do they need protection against?

The answer is that this is a deliberate attempt to antagonize Russia, because it is believed to play well for Republicans. Lynne Cheney has been lobbying for recreating what was the Soviet threat for political advantage since the early 1990s.

It’s all the fault of those damn Eskimos!!!

Of course, once again, the Greeks appear to be compensating for what must be the smallest penises in Europe, vetoing Macedonia’s entry into NATO.

Let’s get this clear:

  • Macedonia was never a part of Greece.
  • Alexander the Great was not a Greek.
  • The people of what was then Macedonia did not speak Greek, except for the aristocracy, who were educated in Greek, and might have spoken Greek with more facility than Macedonian.
  • Greece was conquered by Macedonia, by Phillip of Macedon, and then Alexander took over the known world.

Any questions?

Did Greenspan Get a Fake PhD?

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I came across a review of Robert Auerbach’s book, Deception and Abuse at the Fed: Henry B. Gonzalez Battles Alan Greenspan’s Bank.

It goes into my must read pile.

Auerbach is an outspoken critic of both the Fed and of Greenspan, and was an aide to one of Greenspan’s fiercest critics, Henry Gonzalez, former head of the House Banking Committee.

Basically, it appears that Greenspan got his PhD after stepping down from the Council of Economic Advisers. It happened in a very few months, and it was never published:

Exactly how Greenspan wrapped up his NYU studies in such a short period is unclear, but it appears that his thesis wasn’t especially time-consuming. Auerbach cites an earlier biography that says that Greenspan submitted — instead of a normal Ph.D. dissertation — some papers totaling 176 pages that he entitled Papers on Economic Theory and Policy. Among them was at least one he’d written earlier.

To say that this is irregular is an understatement. Dissertations are supposed to be public and available to people in the field, on the theory that it advances the area of study, even if that study is the “dismal science”.

The implication is not that he has lied on his resume, but rather that because of his connections, he was able to repackage a bunch of slop, and get his PhD anyway.

Sounds like Greenspan’s whole career.

Zimbabwe, Updates and a Correction

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First, the opposition won an absolute majority, as I said yesterday. It appears that the MDC Tsvangirai has 99 seats, MDC Mutambara (a sort of a splinter faction, but not fully a separate party) has 10, and Zanu-PF has 97, with one independent, out of 210 seats (3 seats had the winners die before the election and are empty).

The entire MDC Tsvangirai/MDC Mutambara has me confuse, but it appears that they are the same party, they just don’t get along, so they have an outright majority.

There is also an upper house, and results have been delayed, but this is rather a more complex system than the Parliament.

Still no results in the presidential election, a runnoff is expected, along with a lot of unrest.

The original calculation of 50.3% for Tsvangirai appears to have been a miscalculation.

Judge Restricts RIAA’s Right to Sue

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But only a little bit.

Basically, U.S. District Judge Kenneth Karas said that placing copyrighted material in a shared drive does not constitute publication. They would have to show that illegal copying took place.

This is a good thing, as Declan McCulagh demonstates:

As I wrote last fall, there are some dangers if the RIAA’s “making available” theory is widely adopted by courts. If my mother accidentally shares her computer’s entire hard drive with the world by clicking the wrong button in an OS X setup menu, is that “making available?” Should she be held liable for $222,000 in damages, and lose her house, for accidentally making two CDs of music available to the world?

If I don’t upgrade to a newer version of my operating system even though I know there’s a security glitch that opens my hard drive to the Internet, does that mean I’m “making available” my music collection? Do Internet service providers “make available” access to Kazaa? Do search engines “make available” links to infringing files?

That being said, the Judge gave an alternate route to the RIAA, specifically that they could refile charging an “offer to distribute”.

This means that people with files being shared on Bit Torrent could be liable under this, but search engines, and the examples above would not be.

Breaking: Abstinence Only Education Makes You Really Stupid

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Another bit of news from the department of the blatantly obvious.

It appears that in their zeal to keep teens from having sex, abstinence education may be contributing to STD and pregnancies.

In the hit parade of abstinence only stupidity reinforced myths believed by teens:

  • Fla. Teens Believe Drinking Bleach Will Prevent HIV
  • Drinking Mountain Dew Will Stop Pregnancy
  • smoking marijuana will prevent a person from getting pregnant.

Is it any wonder that Florida has the sixth-highest teen pregnancy rate nationally?